IMMO Has Denied Rumors of Collaboration With the Rothschilds, and That Is Why We Are Now Surer Than Ever

As reported by multiple media sources, an IMMO High1000 Evangelist, Gabriel Brack, has dispelled rumors about the involvement of the Rothschilds in creating the reserve cryptocurrency project – IMMO. Brack stated that the involvement of the Rothschild family in the creation of IMMO is purely speculative. Meaning that the intricate tangle of myths and theories, in which the media has confused IMMO, seems to have been unraveled. However, Gabriel Brack’s denial of communication with the Rothschild family only confirms these suspicions, as Brack has more than 10 years experience as General Manager of the Family Office of Baron Benjamin de Rothschild in Geneva.

The first mention of the creation of the Rothschild cryptocurrency appeared in May of this year. At that time, nothing was known about the IMMO project, and the media called it one of the Rothschild’s “experiments” on the cryptocurrency market. From anonymous sources, classified information about the project has flowed into small media outlets and was not widely spread due to silence from both IMMO and the press office of the Rothschild family office. But even then, apparently having learned from his trusted sources about the project, Vitalik Buterin publicly asked the question: “Are “the Rothschilds” actually remotely as powerful and coordinated as the conspiracy theorists seem to believe, or are they just a group of old-money socialites and all that other stuff is overhyped?”.

After several months, some details about the Rothschild cryptocurrency became available to the public. IMMO creates a digital asset with value backed by real-world material assets. This backing is possible thanks to a unique legal structure where ownership of a token guarantees the owner legal rights and gives them the ability to vote concerning the development of the IMMO project. The internal community of experts of the traditional and blockchain economy, the High1000, is involved in project management and the voting process. These people are united by one goal – the formation of IMMO in place of the world reserve cryptocurrency.

IMMO has been discussed by high-ranking officials

Some media sources have reported that the issue of IMMO was discussed behind closed doors of the G20 summit, which was held in the capital of Argentina this summer. Thus, the Rothschild crypto-project was discussed not only by reputable experts in the community, but also at the level of the heads of finance ministries. But never before has IMMO made an official statement.

For this reason, as Gabriel Brack himself declares, all disputes regarding the power of the Rothschilds and their plans to seize the world economy have not abated. “IMMO chose ‘a closed door policy’ and, perhaps for this reason, the information vacuum began to be filled with speculations and outright assumptions.”, says the Evangelist in his video message.

Gabriel Brack still has close ties with members of the Rothschild family

Brack has told the truth to some respect. But a connection cannot possibly be denied. As Baron Benjamin de Rothschild was looking for an asset manager for IMMO, and decided to appoint the former manager of his trust to the position of trustee of the new crypto-project. As Mr. Brack already has experience in the cryptocurrency market. The Rothschilds have made no effort to distance themselves from the project.

Having worked side by side with Rothschild from 1988 to 2008, Gabriel Brack continues to communicate and meet with the family members of the banking dynasty. Also, the office of Watamar & Partners Sa, where Gabriel Brack is the managing director, is located in Geneva at Place de Saint-Gervais 1, 1201. A seven-minute walk from Brack’s past workplace – the Edmond de Rothschild Asset Management office.

From the very beginning, the project has focused on “working in complete silence”

What can be done regarding the Rothschilds, who are developing a global crypto project? The internet is home to numerous materials that say they are going to “destroy” the crypto-market and absorb the entire capitalization of cryptocurrency. Becoming an absolute monopoly. By making an official statement, that refutes all the rumors, they can continue to pursue the project in silence. It is not surprising that for so long it was possible to limit the number of people that are familiar with the matter. But time passes, and as Mr. Brack said himself: “the information vacuum began to be filled with speculations and outright assumptions.”

Focusing on large private investors, IMMO had no need to publicly announce its employment in creating its own digital asset. After all, this is not some kind of classic ICO with aggressive PR and marketing strategies, which involves pushing the product down the throat of inexperienced investors. But as soon as the rumors around the IMMO project began to be covered by the media, IMMO decided to finally reassure persistent journalists.

According to some sources, IMMO is suspected of attacking Tether

The last straw that determined the immediate need for “disclosure” was supposedly an article in which an anonymous employee of the Bitfinex exchange revealed the details of the scandal around Tether. The independent analyst, who prepared the report for Bitfinex, is confident that the massive sale of USDT was organized with the help of trading bots, which were most likely controlled by IMMO. The author of the published article believes that since the IMMO project aims to create a reserve cryptocurrency, the Rothschilds have a strong motivation to clear a place in the market for their own global project.

One cannot be sure that this material is not fake, but nevertheless, the Rothschilds do have the resources to exert a strong influence on the cryptocurrency market. And again, the implementation of a project like IMMO can only be managed by prominent people with an endless budget. Being a major project with reputable people behind its creation, how else could IMMO be the subject of a G20 discussion?

We appealed to a High1000 member to comment on Gabriel Brack’s statement, promising not to mention his name. He refuted the direct involvement of the Rothschilds in the project. But on the specific question posed “do the Rothschilds have anything to do with IMMO?”, He gave no answer.

 More than 30 years ago, the authoritative magazine The Economist, which belongs to the Rothschilds, mentioned the appearance in 2018 of a single world currency. Speculation that the Rothschilds for 30 years have planned the creation of a cryptocurrency is most definitely humorous. Nevertheless, every joke has a bit of truth. If IMMO is not directly associated with the Rothschilds, then it is possible that at least the people behind this project may be an affiliated structure associated with the dynasty of bankers.

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Malta Attracts 5,000+ Attendees in Crypto Conference, Active Market

In the cryptosphere, all eyes are on Malta, as November 1 marked the start of The Malta Blockchain Summit, a much-hyped event that looks to shine a light on the ever-growing cryptocurrency and blockchain industries. The island nation, which has established itself as a stand-out destination for companies associated with crypto and blockchain, also saw a big day on the regulatory front as its Virtual Financial Assets Act (VFA) come into force.

The Malta Blockchain Summit

The Malta Blockchain Summit comes at an important time, as 2018 winds down and crypto asset providers look for a continued legitimization of the industry and its real-world applications, as well as a further uptick in interest from institutional investors

The two-day event, which has drawn commentators and investors from across the world, boasts four conferences and a giant, sold-out expo floor. Highlights include a Hackathon, an ICO Pitch, a Blockchain Awards ceremony, and a Crypto Cruise. As for the numbers, it boasts 5,000 delegates, hundreds of investors, 100 speakers, and 300 sponsors and exhibitors.

According to its website, The Summit promises to be an innovative and momentous opportunity for global influencers to network and debate the potential applications of blockchain across a myriad of industries including marketing, entertainment, government, and banking. Also of note is that the dialogue that takes place in Malta is likely to set the stage for the crypto industry as we move towards 2019.

One speaker of specific interest is John McAfee — world-renowned computer scientist, activist, business leader, and cryptocurrency evangelist who in 1987 founded McAfee Antivirus, which, under McAfee’s leadership, executed a meteoric rise to the top of the computer security industry. “We are coming into our power,” McAfee Tweeted, highlighting the importance of the Summit for crypto:

A lifelong advocate of personal freedom, McAfee has been a vocal critic of privacy invasion and encryption backdoors. He has also been ranked as one of the top five cryptocurrency personalities by the Bithemoth Exchange along with Roger Ver, Vitalik Buterin, Changpeng Zhao, and Satoshi Nakamoto.

Another notable attendee is Scott Stornetta, who is considered by many to be one of the founding fathers of blockchain technology. In 1991, Stornetta, along with Stuart Haber, published the first paper that outlined blockchain architecture — a paper which became the framework behind Satoshi Nakamoto’s Bitcoin blockchain infrastructure.

Since then, the Stanford-educated Stornetta has assumed a prominent role as Chief Scientist for the Australian investment firm First Digital Capital, where he is in charge of evaluating blockchain technology firms and initial coin offerings (ICOs).

Speaking on the event, Stornetta, a vocal supporter of the Maltese government’s recent efforts to position the island in the eye of the blockchain storm, said:

“I am happy to provide useful ways to support Malta in its efforts to strengthen its already leading position in establishing itself as a centre of blockchain-related activity. Hence, my focus is on delivering a keynote that will be unique, entertaining and valuable for its insight to all attendees at this summit.”

Malta’s Virtual Financial Assets Act

On top of the commencement of the Summit, Nov. 1 also marked the day that Malta’s Virtual Financial Assets Act (VFA) came into play. The Act, coordinated by the Malta Financial Services Authority (MFSA), will regulate the registration of white papers by issuers of virtual financial assets, VFA service providers, and VFA agents.

The aim of the VFA is to provide a fair balance between both sides, allowing for investor protection, market integrity, and financial stability, while at the same time fostering regulation that supports the innovation and adoption of new technologies. As might be expected, the Act also looks to provide limits on the potential for crypto’s use in money laundering and the financing of terrorism.

In related news, as November progresses the MFSA intends to publicly outline its FinTech Strategy, which looks to enable further opportunities for crypto asset providers. The Strategy will outline the paradigm shift in the way financial services providers interact with their customers, establishing a holistic and robust sector for both start-ups and industry incumbents, the MFSA’s CEO Joseph Cuschieri said.

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We Will Provide Missing Link for Institutional Investors, Says Fidelity Crypto Head

The president of Fidelity Digital Asset Services has spoken about the company’s plans in an interview, such as the decision not to launch an in-house exchange, how it intends to attract more institutional investors, and why it’s crypto offering is focused on custody and trade execution.

Crypto Paired with More Traditional Financial Models

In his interview with Laura Shin, yesterday, on her Unconfirmed podcast, Tom Jessop, president of Fidelity’s new investment arm, outlined the asset management’s game plan.

Rather than operating an exchange — which Jessop says “other folks are already doing quite a good job at” — the firm instead wants to focus its energy on creating high quality market access services for its customers.

To make this happen, Fidelity intends to work with existing exchange and infrastructure providers to evolve the market in a direction that “suits the needs of institutions” as opposed to retail clients (at least for the near future). However, Jessop declined to divulge which exchanges have so far garnered Fidelity’s stamp of approval.

In order to meet the “needs of institutions,” Fidelity is building its platform around a more traditional model. This move is in response to what Jessop sees as a big problem in the current market: that most cryptocurrency exchanges require buyers and sellers to have funds upfront, and this need for pre-funded accounts creates friction.

In order to provide a frictionless experience, Fidelity plans to follow a model that permits users to execute trades at one or more exchanges at best price, then determine how to settle. This is what institutional demand requires, Jessop says.

Fidelity: Perfect Fit for Custody Solution

He goes further, though, explaining how currently there are lots of investors who have large positions in crypto that face difficulties executing trades due to the lack of a suitable custodian.

This is the gap in the market Fidelity hopes to fill.

Jessop believes that Fidelity’s vaulted cold storage custody solution, when paired with its traditional security protocols (the “Fidelity standard”), will be the missing link that finally lures a herd of institutional investors into the cryptosphere.

Jessop continues, saying that it’s Fidelity, and only Fidelity, that has the tools to make this happen. He explains that the level of security necessary to safeguard customer’s private keys is a mix of physical security, cybersecurity, and operation security, which, as Jessop points out, Fidelity has a lot of experience with.

Not only is the firm currently handling over $7 trillion in assets, but it’s been researching and experimenting with cryptocurrencies and blockchain since 2014.

This is exactly what Fidelity is selling to institutional customers: “we know how to manage security at scale.”

Accelerated Influx of Institutional Investors

In closing, Jessop highlights the fact that as of late there’s been a rapid maturation of interest in the industry.

This includes real work that is being done to determine the role of digital assets in a broader investment thesis such afamily offices and emerging asset managers who are looking to create trust products and other market access vehicles for crypto.

This reflects the fact that investors are starting to do work around the digital asset class in the same way that they try to understand equity markets of fixed income markets. Jessop points out that this is a very healthy sign for the industry moving forward.

It’s now been 10 years since the world was introduced to the Bitcoin whitepaper. However, according to Jessop it is Fidelity’s new crypto offerings, paired with the state of the growing industry, that create the perfect storm for an acceleration of institutional investors into the market. 

Leading the Curve

Looking ahead, on the back of this institutional evolution into the space, we can “expect more [influx] over this year and into ‘19, which will raise the bar for everyone and help accelerate growth in the market,” Jessop claims.

Although he is willing to admit that Fidelity may not have made a particularly early entrance into the crypto space (compared to startups, the very nature of institutions means they typically don’t lead the market in new ventures), today, with its offerings geared towards attracting institutional investors, the firm is in many ways ahead of the majority of its Wall Street competitors:

“Fidelity is excited to be the first, or one of the first, and expect there will be more [asset management firms] behind us,” Jessop concludes.

Featured image from Shutterstock.

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Food Shipment Successfully Moved on Bitcoin Blockchain With Smart Contracts

Following in the footsteps of other global leaders in industries such as precious metals and food wholesale, trendsetters in the shipping and freight industry are now using the smart contract-enabled Bitcoin blockchain to securely and transparently conduct business and collaborate more efficiently with partners along the entire supply line.

dexFreight Trials Smart Contract Platform on Bitcoin Blockchain

Today, October 25, the decentralized logistics platform dexFreight announced the completion its first blockchain-based shipment using smart contracts, which saw a 5,320-lb frozen food shipment travel from Preferred Freezer Services in Medley, FL to Manny’s Enterprises, Inc, in Sunrise, FL. This move by dexFreight is a far cry from the first food purchase made on the Bitcoin blockchain on May 22, 2011, the now infamous Bitcoin Pizza day which marks the first time the coin was used to order food: two delivery pizzas.

“This is a huge milestone towards an imminent transformation of the logistics industry through the adoption of blockchain technology,” wrote Rajat Rajbhandari CEO and co-founder of dexFreight on the company’s blog. “Our platform aims for a truly decentralized model, open to all the stakeholders, and allowing for a new world of services that will bring much needed optimization and liquidity to this industry.”

dexFreight’s platform, which envisions an ecosystem of open source protocols, blockchain, and machine learning technologies, allows the shipper and carrier to directly connect, negotiate rates, and schedule pickup and delivery. The company claims their new operating system will deliver unprecedented transparency, accountability, as well as a layer of trust that is currently lacking in the world of logistics.

It features an industry-first blockchain-based verified identity and objective reputation system derived from smart contract data. This will permit the company to gather and analyze key performance indicators such as on-time pick-up and delivery, on-time payments, loading and unloading times, and freight claims.

As this trove of data grows, it will increasingly help shippers and third parties streamline the carrier onboarding process while reducing associated liability risk, according to dexFreight and its partner RSK, the first smart contract platform secured by and operated on the Bitcoin blockchain:

“With the use of smart contracts, companies like dexFreight can transfer value and assets between parties on our platform,” wrote RSK CEO Diego Gutierrez. “With a defined set of rules, in this case for logistics, all participants know that their business needs will be fulfilled without anyone altering their agreement or changing the rules.”

De Beers and Walmart Also Using Blockchain to Foster Efficiency and Trust

In May, one of the world’s largest diamond boutiques De Beers announced the successful completion of a blockchain pilot for tracking diamonds along the entire value chain: from mine, to cutter, to polisher, and, finally, to jeweler. This marked the first time a diamond’s journey was digitally tracked from mine to retail.

To make it happen, DeBeers developed a blockchain platform called Tracr. Following the successful completion of its trial run, the Tracr blockchain is set for a full launch before the end of the year, when the platform will be open to the entire industry.

In fact, five leading diamond manufacturers — Diacore, Diarough, KGK Group, Rosy Blue NV, and Venus Jewel — worked with De Beers throughout the entire process, playing integral rolls in the development of Tracr. According to De Beers, these manufacturers were chosen as partners because they have significant experience in the processing of large stones as well as broad coverage across the midstream of the industry.

Another company tapping into the blockchain is Walmart. In partnership with IBM and Tsingua University’s National Engineering Laboratory for E-Commerce Technologies, the global food giant is testing the blockchain to efficiently track food products in real time through the supply chain.

Although still in its infancy, Walmart’s blockchain project has already greatly reduced its tracking times. This, in turn, has increased food safety, one of the main reason the company hopped on the blockchain bandwagon according to Vice President of food safety and health Frank Yiannas.

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FBI: “Call of Duty” Players Remotely Stole $3.3 Million in Cryptocurrencies

A group of “Call of Duty” players from Indiana are accused of stealing more than $3 million in cryptocurrencies after coercing an Illinois man to aid them in remotely hacking unsecured crypto wallets on more than 100 cell phones.

Man Coerced Into Hack After SWATing Incident

The episode began in Bloomington, Illinois, where a local man told the FBI he met the members of the would-be group of cybercriminals online playing Call of Duty. In the simulated warfare game, players are able to communicate with each other in real-time and with relative privacy.

The group, based out of Dolton, Indiana, allegedly coerced the man from Bloomington into working for them using an intimidation tactic called “SWATing,” a nefarious, illegal, and dangerous phenomenon that has become increasingly popular in online gaming communities.

SWATing is when police are called with a false report of a violent crime at someone’s home, which prompts a response from a SWAT team — oftentimes leading to door breaches, gunfire, and even the accidental deaths of unknowing victims. It’s often used as a decidedly dark method of payback, or, as in this case, to intimidate or threaten an individual.

Afraid of further retaliation the man succumbed to the hacker’s requests, to which they handed over names, phone numbers, and other information that permitted him to remotely access the cell phones of their victims.

According to the FBI affidavit, the man admitted to taking over the cell phones of more than 100 people. Once the group took over a phone, they were able to hack into a victim’s cryptocurrency account and drain their funds. 

The group is suspected of stealing at least $3.3 million in various cryptocurrency, including about $805,000 in Augur’s Reputation Tokens, according to the FBI. The suspects then allegedly moved stolen tokens through cryptocurrency networks, such as Ether or Bitcoin, to their own digital wallets.

As of yet, the Chicago Sun-Times isn’t naming the suspects identified in the affidavit because they don’t appear to have been charged with any crimes. In an online interview the Bloomington man proclaimed his innocence — even going as far as to say that considers himself a victim:

“I have done nothing but cooperate with Augur and the FBI,” he said. “I have never once profited from anyone [by] crypto-hacking, ever.”

Crypto Thefts in First Half of 2018 Total Over $1.1 Billion

According to recent study from cybersecurity firm Carbon Black, the total amount of cryptocurrency that has been stolen through cybercrime this year alone is over $1.1 billion — primarily through ransomware and exchange hacks.

The firm’s report claims that many criminals are using the dark web to appropriate cryptocurrency from their victims, estimating that there are over 12,000 marketplaces with almost three times that number of crypto theft listings between them. Rick McElroy, security strategist at Carbon Black, spoke on the trend, noting how easy it is for cybercriminals to operate these days:

“It’s surprising just how easy it is without any tech skill to commit cybercrimes like ransomware… It’s not always these large nefarious groups, it’s in anybody’s hands.”

Part of the reason for this is the accessibility and user-friendliness of the tools of the trade. McElroy said that certain pieces of malware even come with customer service to aid would-be cybercriminals, adding that the malicious software costs an average of $224 but can be picked up for as little as $1.04.

Many of the attacks against crypto users, companies, and exchanges originate from an organized group of criminals like those out of Indiana, however, McElroy says, they’re just as likely to be the product of a trained engineer who is out of work:

“You have nations that are teaching coding, but there’s no jobs… It could just be two people in Romania needing to pay rent.”

Image from Shutterstock

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Report: Bitcoin is Less Volatile Than Amazon, Netflix, and Nvidia

Historically, cryptocurrencies like Bitcoin have been criticized for their volatility, a trait which is often cited as a hurdle for crypto adoption in terms of real-world usage and increased interest from institutional investors. But according to new data, the No. 1 digital currency by market cap is actually less volatile than some of the largest and most popular stocks on Wall Street.

Bitcoin’s HV Much Lower Than in Early-2018 

The data comes from CBOE Global Markets, which focused on the 20-day historical volatility (HV) of Bitcoin, a number which has fallen to 31.5% — comparable to the HV of Domino’s Pizza which sits at 36.2% (see complete chart on Market Watch).

This low HV is especially impressive when compared with the HV of major tech firms like online retail giant Amazon (35%), streaming service Netflix (52%), and computer chip manufacturer Nvidia Corp (40%).

Bitcoin has even crept to within a couple percentage points of tech giant Apple, which is sitting just below the coin with an HV of 29.3%. And when compared to the HV of five of its crypto cousins, including Ethereum, Ripple, Bitcoin Cash, and Litecoin, Bitcoin comes out the lowest.

Looking back to January, when the price of Bitcoin was tumbling from the all-time-highs of almost $20,000 registered in late-2017, the coin’s 20-day HV reached an astonishing 140% — almost 5 times higher than it is today.

Another related data point is Bitcoin’s standard deviation. In statistics, the standard deviation is a measure that is used to quantify the amount of variation in a set of data values. For our purposes, the standard deviation of Bitcoin can be used as a measure of volatility.

Kevin Davitt, a senior instructor at The Options Institute at CBOE, explained to Market Watch how Bitcoin’s standard deviation has changed drastically since earlier this year, dropping from +/- 42% to just +/- 7.3%:

“A one standard deviation move for Bitcoin at present is about $475. That works out to +/- 7.3% (475/6500). Compare that to earlier this year (mid-January) when Bitcoin was around $11,000. Back then the standard deviation measured $4640 or +/- 42%,” Davitt said.

Drop in Volatility Likely to Continue as Crypto Market Matures

This new data on Bitcoin is great news for many, in particular “crypto evangelists” who believe decentralized technology to be the new financial frontier. For them, the coin’s low HV is important because cryptocurrency detractors often cite excessive volatility as a significant hurdle for adoption of the coin and as a reason why some institutional investors are wary to get involved in the space.

Interestingly, that perspective is not shared by all: day traders, who make their money off Bitcoin’s price fluctuation, are actually yearning for its volatility to pick back up. But unfortunately for them, according to Davitt, today’s low HV may be pointing towards a “new normal” for the coin:

“Perhaps we are witnessing the maturation of a market. It’s far too early to declare this the “new normal” but the persistent range over the last few weeks may be hinting at a structural shift. Time will tell,” Davitt said.

Mike McGlone, a Bloomberg Intelligence commodity strategist, has a similar perspective. He explains that because the market is rapidly maturing, it is likely that price volatility will continue to decline with the introduction of more Bitcoin-related products and services:

“This is a maturing market, so volatility should continue to decline. When you have a new market, it will be highly volatile until it establishes itself. There are more participants, more derivatives, more ways of trading, hedging and arbitraging.”

 

Image from Shutterstock

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Metal-Backed Tiberius Coin ICO Put on Hold Due to High Credit Card Fees

This Tuesday, Tiberius Technology Ventures temporarily halted sales of its metals-backed digital currency Tiberius Coin. The firm plans to refund $1 million to investors due to high credit card fees that it said made the project unworkable.

Tiberius Coin Explained

In January of this year the concept first came to light when Swiss-based Tiberius announced the introduction of a new product to the crypto markets: metal backed tokens. The Tiberius Coin, or tcoin, was pitched as a more stable alternative to other, often volatile cryptocurrencies.

Tcoin, which is backed by seven precious metals, was set to become available to prospective investors through an initial coin offering (ICO) starting October 1. By giving holders the ability to redeem coins for physically deliverable metals including Copper, Aluminum, Nickel, Cobalt, Tin, Gold, and, Platinum, Tiberius claim tcoins would retain a reliable minimum value.

The firm hoped that this type of stable coin would prove to be more popular to investors over fiat backed ones, such as Tethermainly because it combines the technology of cryptocurrencies with the backing of physical commodities, permitting investors to weight their cryptocurrency portfolios with the stability and diversity of multiple metals.

Giuseppe Rapallo, the CEO of Tiberius’ Technology Ventures, spoke about tcoin, saying:

“Instead of underlying the digital currency with only one commodity, we have chosen a mix of technology metals, stability metals and electric vehicle metals. This will give the coin diversification, making it more stable and attractive for investors.”

Initially, the coin was set to be exclusively listed on LATOKEN, an Estonia-based exchange that is compliant with Swiss regulatory authorities. The goal of the new coin, according to the firm, was for it to be used as a store of value and a method of payments, representing a modern take on traditional means of bartering.

Processing Fees Lead to Halt of Coin Sale

Despite the novel concept and some interest from the crypto community, today, October 9, Tiberius has put a halt on the entire tcoin operation:

“At the beginning of October we received news that our credit card processors were going to make investing in tcoin difficult,” Tiberius said in a statement to investors, citing additional fees of 15%.

The company’s refusal to accept such fees meant that some investors were unable to buy the currency, it said, and as a result it had decided to halt all tcoin sales temporarily, as reported by Business Insider.

Tiberius Technology Ventures said it had raised $1 million from 700 investors, who, as noted, will be reimbursed for the investments. 

“All investors who took part in the presale and current sale will have their money refunded,” Tiberius said.

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Expert: Self-Regulation on Crypto Exchanges Not Enough to Appeal to Institutional investors

In the absence of regulatory oversight, crypto insiders are looking for ways to self-regulate in attempts to make the industry more attractive to institutional investors, some of whom are wary of entering the market due to the potential for hacks and fraud. But some experts are calling into question the practicality of these groups.

Industry Groups Look to Regulate Crypto From the Inside Out

Interest amongst consumers and institutions is undoubtedly growing, but the nascent industry is still plagued by fraud and regulatory uncertainty. As for numbers, in the second quarter of 2018 investors lost $670 million in cryptocurrencies due to hacks and scams, according to Business Insider.

In attempts to change this and shine more light on the sometimes opaque crypto market, as well as push for fair regulations, two new groups have emerged. One is the Virtual Commodity Association, the industry’s first self-regulatory organization, which was launched by the Winklevoss brothers’ Gemini exchange, Bitstamp, bitFlyer USA, and Bittrex this past August.

The second group, the Blockchain Association, is comprised of companies like Coinbase, Circle, Digital Currency Group, Polychain Capital, Protocol Labs, and Zcash, and focuses on topics such as tax treatment of tokens and consumer protection.

While many say the establishment of the VCA and other groups is a step in the right direction, some skeptics, like Joseph Moreno, a partner in Cadwalader’s White Collar Defense and Investigations Group, say the idea of self-regulatory organizations may not be very effective.

“There’s no teeth in an SRO if there’s not a regulatory body behind it… It doesn’t look to be very effective without statutory authority.”

Moreno contrasted the self-regulating nature of the VCA with that of Financial Industry Regulatory Authority (FINRA), a self-governing body which is authorized by Congress and supervised by the Securities and Exchange Commission (SEC). FINRA, thanks to its direct connection with the federal government, can take a variety of steps against cryptocurrency service providers it believes to be operating on the wrong side of the law. 

Self regulatory groups, on the other hand, “will not have any governmental-like regulatory authority to bring enforcement actions or levy fines,” Moreno says.

Does the Crypto Industry Itself Want to Self-Regulate?

Another point to consider is that not everyone in the crypto world is open to self-regulatory organizations like the VCA and the Blockchain Association, which, to many, go against the concept of decentralization that is at the very core of blockchain-based digital currencies.

“Part of the charm and fascination of blockchain is its ability to take out central intermediaries,” Moreno said. “Within the community, there is a direct natural bias against centralization and giving power over to the central authority.”

That said, there is obvious reasons why these organizations are springing up, as 2018 has seen government forces across the globe looking with increased scrutiny at the industry in attempts to regulate from the outside in.

Earlier this year we saw this in the form of cease-and-desist orders and even blanket bans against cryptocurrencies and the company’s that create them. And in just the past few months, the SEC and FINRA have issued a string of punitive actions against companies involved with digital coins.

In response to this, some companies facing undesirable regulatory environments in countries like the U.S., Japan, and South Korea have moved their entire operations to jurisdictions with more favorable and concrete financial climates, like the island nation of Malta.

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Over 1,500 Bitcoin ATMs to Be Deployed in Argentina in Response to Rampant Inflation

According to representatives from Athena Bitcoin and Odyssey Group, by the end of 2018 Argentina will be host to 30 Bitcoin ATMs. That number will jump to about 150 early next year, and to more than 1,500 by the end of 2019. This crypto expansion into the South American country comes amid an economic crisis that has seen the value of it’s national currency, the peso, sink dramatically.

Bitcoin ATM Developers Race to Argentina

U.S.-based Athena Bitcoin, a company that specializes in the development and operation of cryptocurrency ATMs, launched Argentina’s first just a month ago in Buenos Aires.

Another U.S.-based company, Odyssey Group, said of the 150 ATMs it aims to install in the country by the end of the year, 80% of those will be operational within the first few months of 2019. The move will be Odyssey Group’s first foray into Latin America, but Reuters quotes the company as saying it is increasingly looking to expand its activities across the entire region.

Athena Bitcoin, on the other hand, already operates 12 ATMs in Colombia, as well as one in Mexico. Moving forward, the company intends to further develop its operations in Mexico and also expand operations to Chile and Brazil. A company spokesperson said the machines – which currently only allow customers to conduct Bitcoin transactions – will be modified in the future to permit transactions in other coins like Litecoin, Ethereum, and Bitcoin Cash.

Argentina is an ideal location for Bitcoin ATMs because inflation of it’s national currency — which has lost more than 50% of its value against the dollar so far in 2018 — is expected to exceed 40% by year’s end. And as NewsBTC reported last month, Charlie Bilello, director of research at New York-based investment advisory group Pension Partners, recently published findings on the returns of cryptocurrencies and fiat currencies which revealed something remarkable: this year Bitcoin has actually outperformed the Argentine peso — as well as the Venezuelan bolivar and the Sudanese pound.

From Athena Bitcoin’s perspective this unfortunate economic situation presents a massive growth opportunity for the cryptocurrency industry, as noted by the company’s Argentina operations manager Dante Galeazzi:

“Today, the cryptocurrency ATMs in the world are growing exponentially. In Argentina, there were no commercial ATMs and the idea was to be the first to capture the market.”

ATM Visibility Only Set to Increase

In contrast to Athena Bitcoin’s machines, which only permit customers to buy and sell digital currencies, Odyssey Group’s ATMs will also be able to complete more traditional banking transactions including depositing and withdrawing cash and transferring money between accounts. These ATMs will be operated by Octagon, a company owned by Odyssey Group, and just a year from now they aim to have installed about 1,600 Bitcoin ATMs in the country, according to general manager Begona Perez De Solay.

This proposed spike in the number of Bitcoin ATMs is not just limited to the Southern Hemisphere, as Bitcoin ATMs are increasingly being seen in many major cities across the U.S. As NewsBTC reported this summer, the Virginian-Pilot estimates there to be 80 Bitcoin ATMs currently operating in Detroit, Michigan alone, and more than 2,000 others spread across the rest of the country.

Over the next 15 months, as Athena and Odyssey’s ATMs introduce crypto to more and more consumers across the globe, authorities will likely attempt to push back by claiming that the coins and ATMs can be used to launder money and/or conceal ill-gotten funds.

But Joe Ciccolo, founder of digital currency consultancy BitAML, claims that this association between money laundering and Bitcoin ATMs is an overrated and irrelevant concern. To reinforce this, he notes that ATMs enable operators to obtain customer information like a driver’s license or state ID number. ATMs can also enforce transaction controls such as daily limits per person and caps on transaction denominations.

 

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US Bitcoin Investment Trust Drops to Lowest Levels in a Year

The only U.S. Bitcoin investment trust, GBTC, has dropped to its lowest levels of the year — down 10% last week alone. Bitcoin’s current price certainly has an effect, but these levels are more-so a response to a combination of other factors: high fees associated with the fund, investor attraction from GBTC competitors, and regulatory uncertainty surrounding upcoming decisions from U.S. authorities on Bitcoin exchange-traded funds (ETFs).

Grayscale Bitcoin Investment Trust

The Grayscale Bitcoin Investment Trust, or GBTC, which tracks Bitcoin’s market price, has seen its net asset value hit its lowest point, down nearly 80% from a high of almost $40.00 following Bitcoin’s price surge to almost $20,000 late last year. At the time of writing, GBTC is trading at $7.40. In early January the fund was trading at almost $25.00.

Some investors correlate GBTC’s downward trend with its expensive fees, as the trust charges $20.00, or 2%, for every $1,000 invested. By comparison, the average equity mutual fund expense ratio was around 0.59% last year according to the Investment Company Institute. “Expense ratios are insane for these funds and the current Bitcoin price is creating more problems,” Naeem Aslam, the London-based chief market analyst at TF Global Markets U.K. Ltd., told Bloomberg.

GBTC’s market is important because it is the closest that investors have to an ETF right now, purchasing the cryptocurrency indirectly through Grayscale at a premium. The main advantage when compared to the crypto market itself is that the structure and operation of GBTC is more traditional, so long-time investors are more likely to use it. In relation, Grayscale’s fund attracts interest from those investors that do not understand the crypto market well enough to participate in it directly.

GBTC also has the support of trusted Bitcoin wallet provider Xapo, with all its Bitcoin being stored in Xapo’s cold storage vaults, which are located in mountainsides and decommissioned military bunkers across five continents. This ensures that both the company and its client’s funds are properly stored and protected.

Blame on GBTC, Not Bitcoin

After the news of GBTC’s price drop, Tyler Jenks, President of Lucid Investment, said in a Tweet that the decline in the premium was caused by two major factors: an interest and concern regarding the future of Bitcoin ETFs, and/or the idea that Bitcoin’s price will continue to drop further. 

Moving forward, the biggest question is are market participants losing interested in Bitcoin or in GBTC specifically? It likely leans more towards the latter, especially considering that GBTC is facing some stiff competition.

As reported by NewsBTC, just last week a group of executives at the largest commercial bank in Switzerland, UBS, raised $104 million to launch the first fully licensed cryptocurrency bank by obtaining a license from Finma, the Swiss financial authority.

UBS aside, there are other alternatives like Seba — as well as crypto service providers like Bakkt and Coinbase Custody — that offer the same merit as GBTC for clients who want to invest in digital currencies.

“Our vision is when you log in into your online banking, you’d have access to crypto and fiat within one account,” Seba’s Chief Executive Officer Guido Buehler said.

And there’s others too, like XBT Provider, an exchange-traded note (ETN) which some investors have said takes away from the relevance, and therefore value, of GBTC in the cryptocurrency market.

In conclusion, the 10% drop in GBTC registered last week was not in direct relation to Bitcoin’s recent price slump, but instead, due to uncertainty surrounding the regulatory landscape of the growing industry and an increasing number of company’s beginning to offer cryptocurrency-related services. 

 

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